Capitol recap: What about municipal pensions?

     A view of Harrisburg and the state capitol from City Island. (Lindsay Lazarski/WHYY)

    A view of Harrisburg and the state capitol from City Island. (Lindsay Lazarski/WHYY)

    Local governments and police and firefighter departments’ retirement systems aren’t included in the bill that cleared the state House of Representatives this week.

    Senate Bill 1071 deals with Pennsylvania’s two pensions for teachers and state workers — not the Commonwealth’s 3,500-plus local retirement funds.

    A measure targeting municipal pensions is pending.

    But the bill’s languished in the state Senate Finance Committee since November. Nothing more will happen until amendments are filed by chairman state Sen. John Eichelberger, R-Blair, and he meets with minority chairman John Blake, D-Lackawanna, says Blair’s chief of staff Lee Derr.

    Both men have been working on amendments for seven months or so.

    Blake has said his are intended to reflect more recommendations from a municipal pensions task force headed by the state Auditor General.

    It seems unlikely the General Assembly will “overlay municipal pensions with everything going on in June,” and just nine session days remaining this month, says Blake’s chief of staff Luc Miron.

    In its current form, the bill would:

    • Prohibit spending state aid on administrative costs or expenses.• Require local pension funds to estimate liability and calculate contributions using an assumed rate of return set by the Pennsylvania Municipal Retirement Board. If the old assumed rate’s more than a percentage point higher, the fund could gradually decrease it over no more than a decade. This change would prevent inflating assumed returns to keep down required contributions from workers and public employers.• Restrict how much overtime can be counted as compensation when calculating payment during retirement.• Turn over management of the most distressed pensions to the Pennsylvania Municipal Retirement System, currently overseeing hundreds of local funds.

    Among other things.Originally, this bill focused on pension fund management contracts. The suggestion: apply existing bidding rules only to systems with 100 or more members. About 90 percent of municipal funds are smaller than that, prompting a few representatives to cite transparency concerns and vote against the measure last October.That provision remains.

    But it wasn’t until after the measure passed the House that the elements dealing with retirement benefits calculation and fund management made their way into the legislation.

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